Description

BSE clarifies eligibility of donations made through Social Stock Exchange for tax deduction under Section 80G of the Income-tax Act, 1961.

Summary

BSE has issued a clarification regarding the eligibility of donations made through the Social Stock Exchange (SSE) platform for tax deductions under Section 80G of the Income-tax Act, 1961. This circular provides guidance to market participants, donors, and Non-Profit Organizations (NPOs) listed on SSE regarding the tax treatment of donations made through the exchange.

Key Points

  • Donations made through Social Stock Exchange (SSE) are eligible for tax deduction under Section 80G of Income-tax Act, 1961
  • Clarification applies to contributions made to eligible NPOs registered on SSE platform
  • NPOs must meet prescribed conditions and maintain valid Section 80G registration
  • Donors can claim tax benefits as per applicable rates under Section 80G provisions
  • Documentation and compliance requirements must be fulfilled for claiming deductions

Regulatory Changes

This circular provides clarification on existing tax provisions rather than introducing new regulatory changes. It confirms the applicability of Section 80G benefits to donations channeled through the SSE platform, reinforcing the tax incentive framework for social investments.

Compliance Requirements

For NPOs:

  • Maintain valid Section 80G registration with Income Tax Department
  • Ensure compliance with SSE listing and operational requirements
  • Issue proper donation receipts with required details
  • Maintain transparency in fund utilization

For Donors:

  • Obtain valid donation receipts from NPOs
  • Maintain records of donations made through SSE platform
  • Claim deduction as per prescribed limits under Section 80G
  • Ensure donations are made to eligible institutions with valid 80G registration

For Market Participants:

  • Facilitate proper documentation and record-keeping
  • Ensure compliance with SSE operational guidelines
  • Provide necessary support for tax compliance

Important Dates

  • Circular Issue Date: December 16, 2025
  • Effective Date: As specified in circular (typically immediate)
  • Applicable for FY 2025-26 and subsequent financial years for tax filing purposes

Impact Assessment

Market Impact:

  • Enhances attractiveness of SSE platform for social investments
  • Provides tax certainty to donors contributing through SSE
  • Encourages greater participation in social sector funding

Operational Impact:

  • NPOs on SSE platform can attract more donors with confirmed tax benefits
  • Improves transparency and credibility of SSE as a fundraising mechanism
  • Streamlines compliance process for tax-deductible donations

Investor/Donor Impact:

  • Confirms tax saving benefits for individuals and corporations donating through SSE
  • Provides clarity on documentation requirements
  • Encourages philanthropic investments with tax efficiency

Regulatory Impact:

  • Aligns SSE framework with existing income tax provisions
  • Strengthens regulatory clarity for social sector fundraising
  • Promotes government’s objective of channeling funds to social causes

Impact Justification

Clarification on tax benefits for SSE donations affects NPOs and donors participating in Social Stock Exchange, providing clarity on Section 80G eligibility